Council knew before opening that musical would bomb

Auckland City councillors knew ticket sales were poor and a big loss was imminent when they bailed out the musical My Fair Lady to the tune of $1.4 million a week out from the opening, official papers show.

Despite the grim picture, the council's finance committee agreed with the city's entertainment business, The Edge, that it was best to proceed with a three-week season of the Opera Australia production.

The musical opened on March 25 and flopped, losing $1.9 million. It closed two weeks early on April 12 after selling 18,000 of the anticipated 62,500 to 78,000 tickets.

Two star-studded plays lost a further $500,000 over the same period, taking losses for The Edge over one month to about $2.5 million.

The losses eclipse the Auckland Regional Council's $1.79 million loss on last December's David Beckham-LA Galaxy soccer match.

A confidential finance committee report, obtained by the Herald under the Official Information Act, shows The Edge desperately needed a $1.4 million cash injection from the council for the musical to proceed.

After saying in July last year that the entertainment sector "remains solid in times of hardship", The Edge blamed the dramatic change in the economic climate for poor ticket sales leading up to the opening.

Attached to the finance committee report was a memo from The Edge chief executive Greg Innes saying cancelling the musical would be devastating for the Auckland market and a signal to the industry that Auckland was not a sustainable market in the current environment.

The committee was told the costs and liabilities incurred by The Edge to March totalled $2.7 million, but this could be negotiated down to $1.9 million if the show was cancelled.

It was "highly likely" the losses would be less than $1.9 million from proceeding with the show, said Treasury policy analyst Eric Wen.

"The Edge has indicated that ticket sales for My Fair Lady are very likely to exceed 21,000 given the noticeable pickup of sales in March," Mr Wen said.

The papers also reveal some tension between the council and The Edge over the matter. On the day the musical opened, the finance committee ticked off The Edge for not signalling the degree of commercial risk when the council gave its original backing to the musical in October last year.

Aotea Centre board of management chairman Richard Waddell said in a report this month: "The board is clear that accountability for the end result of My Fair Lady belongs to the board.

"In summary, the board is united in its view that based on the circumstances at the time the decision was made, and, in particular, the then economic climate, the board's reported assessment of commercial risk, including the risk criteria, was correct and was adequately signalled to council."